Some think of my book as just another rant against socialism, therefore a rejection of solutions that would involve extensive use of government. But sprinkled throughout the book are not-so-subtle hints of what actions to take and, equally important, which solutions could potentially prove harmful. What is being missed by nearly everyone in Washington D.C. [...]
In a recent interview, Quantum Fund co-founder and investment biker Jim Rogers explains how he sees the Federal Reserve as a pawn shop for dicey loans… here’s the statement, in his own words: “The man [Bernanke] has taken $400 billion, $400 billion, onto the Federal Reserve’s balance sheets, of dicey loans at best. I mean [...]
Credit deflation just hit the UK for the first time on post-war records… HMMMM… This looks telling. UK banks will soon be able to post raw loans – rather than securitized loans that have been bundled into asset-backed bonds – as collateral against short-term liquidity aid from the Bank of England. This will mean lending [...]
One of the best selling points for investing in emerging markets is growth potential, but like any other sector, this growth must come at a reasonable price. Emerging market stocks are cheap these days. The MSCI Emerging Markets Index has a 12-month forward price-to-earnings ratio of 10.8x, which is 15 percent below the P/E for [...]
Moral hazard is a term with specific meaning in the financial community. Originally the phrase was mainly used to describe a phenomenon within the insurance industry related to the uncertainty about the honesty of those insured. Premium writers have at times noticed that a few who buy insurance lose any incentive to minimize risk, correctly [...]
It seemed simple enough… “bailing” out a few megabanks to keep the entire financial system afloat. And yet, it turned out to be not so simple to save the world. Instead, global governments may have only managed to flood their own balance sheets with bad debt. Now, governments and banks both risk submerging… and may [...]
“It’s gold that puzzles the current Fed chief,” says a commentary piece by William Pesek today. It’s not just Bernanke either. Articles have been consistently cropping up since Bernanke’s statement of confusion about gold, like this one from the WSJ, written by authors who don’t seem to quite understand gold’s value outside of being an [...]
They fought the correction; the correction won. We refer to Bernanke, Summers, Obama, Geithner, Krugman – the whole lot of them. They added three trillion dollars to US debt in the last two years. In two more years the debt will be at 100% of GDP. Add in the debts they’ve guaranteed – from Fannie [...]
Ed. Note: This is an excerpt from Whitney Tilson’s presentation to the Value Investing Congress in Pasadena, California on May 5, 2010. Whitney Tilson is the founder and Managing Partner of T2 Partners LLC and the Tilson Mutual Funds. Two years ago, we stood up here on this exact stage and delivered a very downbeat [...]
The US dollar has recently gained some strength due to its status as reserve currency of the world. Yet, hyperinflation still lurks around the corner as the Fed floods the economy with free money. The below video from the National Inflation Association describes the many drains on US economic power, including Social Security, Medicare, Medicaid, [...]
We’ve opened earnings season with a market reaction more erratic than usual. Some stocks got pounded after missing earnings estimates by a hair. Other stocks drifted upward, despite nosebleed valuations and unimpressive earnings. Banks are making out like bandits…at least on paper. They simply post whatever earnings they feel like reporting, because loans and securities [...]
In the US, producer prices fell in February, more than expected. Core inflation was barely positive. That is not just a US trend. In Europe, price increases have fallen to the lowest level in 11 years. Japan is experiencing the biggest price drops in many years. This sounds like a D-word to us…disinflation, almost deflation. [...]
Stocks up, gold down. Once again yesterday, investors demonstrated their preference for paper over the shiny yellow metal. The Dow Jones Industrial Average notched a slight 3-point gain, while gold tumbled about $17 an ounce. This divergence between stocks and gold is not enormous, but it is telling. Most investors believe the credit crisis is [...]
A new projection is now showing that roughly 1,000 US banks may fail because of the financial crisis that uncovered the toxic assets hidden on bank balance sheets. According to Reuters: “James Dunne, senior managing principal of Sandler O’Neill, said 300 to 400 banks could be seized this year, especially as institutions start to deal [...]
Snowy Sweden had its own banking crisis in the 1990s, but due to extensive bailouts emerged relatively unscathed… well, aside from rampant nationalizations and socialistic tendencies. Sound familiar? Now, another hot idea from that same ice kingdom is catching on in the US. In 2009, in order to “protect” lenders, Sweden put a stability fee, [...]
A new research paper from the New York Fed connects some of the dots for thinking that monetary policy, balance sheets in banking, leverage,… Source
Anthony Bolton may be Britain’s greatest investor. He ran the Fidelity Special Situations Fund from 1979 until his retirement in 2007. Over that 28-year span, the fund earned nearly 20% annually, thoroughly beating the market average of 13% over that time. Because of his long and exceptional track record running a mutual fund and because [...]
Make no mistake; the developed world is drowning in debt and there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation. Look. The American government [...]
In yesterday’s confirmation hearing for his second four-year term as Federal Reserve chairman, Ben Bernanke received a thorough tongue-lashing from Senator Jim Bunning (R-KY). Here are a few highlights from the transcript as well as the video… * “…you put the printing presses into overdrive to fund the government’s spending and hand out cheap money [...]
The motivating idea behind the various U.S. bank rescue measures was to do whatever it would take to get bank loans to the private sector growing again. That mission remains distinctly unaccomplished. Despite all the policy machinations — from TARP capital infusions to outright asset purchases, temporary lending facilities, a near-zero fed funds rate and [...]
